Social Enterprise

Source: www.investopedia.com

What Is Social Enterprise?

A social enterprise is a commercial organization that has specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment. Their profits are principally used to fund social programs.


Understanding Social Enterprise?

The concept of a social enterprise was developed in the UK in the late 1970s to counter the traditional commercial enterprise. Social enterprises exist at the intersection of the private and volunteer sectors. They seek to balance activities that provide financial benefits with social goals, such as providing housing to low-income families or job training.

Funding is obtained primarily by selling goods and services to consumers, although some funding is obtained through grants. Because profit-maximization is not the primary goal, a social enterprise operates differently than a standard company.

While earning profits is not the primary motivation behind a social enterprise, revenue still plays an essential role in the sustainability of the venture. In fact, sustainable revenue differentiates a social enterprise from a traditional charity that relies on outside funding to fulfill its social mission. This goal does not mean social enterprises cannot be profitable; it's simply that their priority is to reinvest profits into their social mission, rather than funding payouts to shareholders.


Special Considerations

Employees of social enterprises come from many backgrounds, but priority is given to those who are from at-risk sections of the community. These include long-term unemployed workers, those who have historically worked in jobs where they were informally paid, and members of marginalized groups. The social enterprise may seek to provide a living wage, which in most cities is above the minimum wage. Sometimes, drawing employees from at-risk groups may be the stated social goal of the enterprise.


Examples of Social Enterprise

A social enterprise is not to be confused with social entrepreneurship, which tends to focus on individuals who develop solutions to social and environmental problems using existing business techniques and strategies. There are many social enterprises who successfully maximize improvements in social well-being.

For example, Warby Parker is an American eyeglass retailer that donates a pair of glasses to someone in need for every pair sold. Tom's, a California-based retailer, similarly has pledged to donate a pair of shoes or sunglasses for every pair sold. Also, Climate Smart trains businesses and gives them software tools that let them track and cut their greenhouse gas emissions.


KEY TAKEAWAYS

  • A social enterprise is a commercial organization that has specific social objectives that serve its primary purpose.
  • Social enterprises seek to maximize profits while maximizing benefits to society and the environment.
  • Their profits are principally used to fund social programs.

Social Enterprise

Source: Wikipedia

A social enterprise is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being—this may include maximizing social impact alongside profits for external shareholders.


Social enterprises can be structured as a for-profit or non-profit, and may take the form (depending on in which country the entity exists and the legal forms available) of a co-operative, mutual organization, a disregarded entity, a social business, a benefit corporation, a community interest company, a company limited by guarantee or a charity organization. They can also take more conventional structures. Social enterprises have both business goals and social goals. As a result, their social goals are embedded in their objective, which differentiates them from other organizations and corporations.A social enterprise's main purpose is to promote, encourage, and make social change.Social enterprises are businesses created to further a social purpose in a financially sustainable way. Social enterprises can provide income generation opportunities that meet the basic needs of people who live in poverty. They are sustainable and earn income from sales is reinvested in their mission. They do not depend on philanthropy and can sustain themselves over the long term. Their models can be expanded or replicated to other communities to generate more impact. A social enterprise can be more sustainable than a nonprofit organization that may solely rely on grant money, donations or federal programs alone. As a for-profit model, you control the curriculum and funding of the program. The incentives of the company are designed such that greater impact directly correlates to a great profit. Investors and business partners today want to know that the companies they choose are doing more than just providing a product or service. They look for companies that are doing good. They will feel a special connection to companies whose values align with their own.

Types of Social Enterprises

  1. Trading Enterprises

    While earning profits is not the primary motivation behind a social enterprise, revenue still plays an essential role in the sustainability of the venture. In fact, sustainable revenue differentiates a social enterprise from a traditional charity that relies on outside funding to fulfill its social mission. This goal does not mean social enterprises cannot be profitable; it's simply that their priority is to reinvest profits into their social mission, rather than funding payouts to shareholders.

  2. Financial Institutions

    Saving and Loans organisations such as credit unions, micro credit organisations, co-operative banks and revolving loan funds are membership owned social enterprises. Credit Unions were first established in the 1850s in Germany and spread internationally. Co-operative Banks have likewise been around since the 1870s, owned as a subsidiary of a membership co-operative. In recent times Microcredit organisations have sprung up in many developing countries to great effect. Local currency exchanges and social value exchanges are also being established.

  3. Community Organisations

    Many community organisations are registered social enterprises: community enterprises, housing co-operatives and community interest companies with asset locks, community centres, pubs and shops, Associations, Housing Associations and Football Clubs. These are membership organisations that usually exist for a specific purpose and trade commercially. All operate to re-invest profits into the community. They have large memberships who are customers or supporters of the organisation's key purpose. There are village co-operatives in India and Pakistan that were established as far back as 1904.

  4. Non-Government Organisation (NGOs) and Charities

    There are many NGOs and charities that operate a commercial consultancy and training enterprise, or subsidiary trading enterprises, such as Oxfam. The profits are used to provide salaries for people who provide free services to specific groups of people or to further the social or environmental aims of the organisation.


Social Entrepreneurship: A Growing Trend in Indian Economy

Source: http://ijiet.com

Abstract - Social entrepreneurs can help get better various issues like nutrition, education and health care and many are still blighted by unemployment and illiteracy by helping those less fortunate towards a worthwhile life. Rather than leaving societal needs to the government or business sectors, they can solve the problem by changing the system. Social entrepreneurship is expected to be the next big thing to influence India as the country juggles to achieve a balance between a growing GDP growth, ensuring inclusive growth and attempting to address issues ranging from education, energy efficiency to climate change. This paper attempts an analytical, critical and synthetic examination of Social entrepreneurship in India.


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